February 13, 2017

Promise and Peril of Place-based Policies

In this Livemint ArticleVivek Dehejia, Senior Resident Fellow at IDFC Institute, talks about the promise and peril of "place-based" economic policies, and how they relate to skyrocketing inter-state income inequality in India. 

 

"It is not at all far-fetched to argue that the turn towards a market economy is what created the opportunity for states with good infrastructure, a well-educated population, and a culture of entrepreneurship, among other things, to capitalize on new opportunities, while others caught in a statist mindset failed to adapt to circumstances in which individual initiative was now rewarded by the market rather than all differences being flattened out by the state...

 

In this instance, preserving the social and political fabric of our Union, it seems to me, would be a legitimate rationale for intervening to try to prevent regional differences in income per person from skyrocketing...There may be some comfort in realizing that around the world, in advanced and emerging economies alike, policymakers are grappling with widening regional inequalities and are being confronted with the need for “place-based” economic policy interventions to ameliorate these inequalities."

 

Read the full article here and more on the economic divergence between the Indian states in this IDFC Institute Briefing Paper, co-authored by Vivek Dehejia and Praveen Chakravarty

 

 

 

 

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